Itau Unibanco to Attract Larger Clients With Iti Platform
Per a Reuters article, Itau Unibanco Holding SA ITUB is mulling to offset declining card processing fees by offering its new instant payments platform — Iti — to larger clients. The platform is expected to be launched by third-quarter 2019, which will allow the bank to charge fee of up to 1% on transactions.
The platform will use a QR or quick response code, which enables instant payments through a QR scanner or smartphone with built-in camera.
Based on past experience, the company finds card processing services to be more apt for mid-sized and small clients. Marcos Magalhaes, CEO of Itau Unibanco's card processing unit Rede, told Reuters that since fourth-quarter 2018, supplying card processing machines and services to Brazil's largest retailers has become an unprofitable business.
Intense competition in the card processing business made the company look for ways to bolster fees. New entrants such as PagSeguro Digital Ltd and Stoneco Ltd have been gaining market share, and have a strong financial position post IPOs in 2018.
In May 2019, the bank company had announced plans to close 400 branches in the country over the next two years in the bid to cope with increasing demand for digital platforms. It had stated "the reduction of brick-and-mortar branches is a trend to adapt to the needs of clients and demand for digital services."
Itau Unibanco’s restructuring efforts seem impressive and is likely to support its long-term growth. Nevertheless, heightening competition, rising expenses and stressed conditions in the Brazilian economy pose significant risks.
Shares of Itau Unibanco have lost 13.4% over the past six months compared with 13.3% decline registered by the industry.
Itau Unibanco currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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